1. THE GREAT AMERICAN SELL-OFF
During last decades of the 20th century, Americans participated in the greatest sell-off of assets ever observed in history. Not only were the past achievements sold but the future effort was mortgaged through widespread deficit spending and borrowing. Employment shifted from creating new wealth to selling old wealth.
Businesses arose which specialized in acquiring, handling, or financing the Great American Sell-off. Examples are conglomerates and "investment" bankers. These soppy busynesses (soppy because they manipulate scribbled-on paper products) grew while actual production of goods and other services suffer. As a result, the nation becomes one of money-changers and merger-masters. Conglomerates did not come into existence from increasing jobs or production. Rather, the opposite occurred.
Besides the hours wasted when busynesses seek income by acquiring and discarding industries, the instability causes a drop in production. This production instability means that production per capita must decline. Shortage inflation will result as production is decapitated. To call it capitalism is to confuse the mere use of the soppy symbols of capital with real capital gains and growth, that is, increased production per capita.
Some sell-offs are quite obvious, some are not. Most necrose the whole system: decapitalization, not capitalization. The most necrotic sell-offs involve individuals inside industries. These sell-offs of, by, and for insiders benefit only a special few in very subtle ways. The list is long of companies "divesting" themselves of assets in the face of inflation or of companies in pursuit of non-productive, inflationary returns. Some very obvious and direct examples of sell-offs to cope with inflationary pressure were
U.S. Steel attempting to sell 27% of its coal reserves to SOHIO,
The U.S. Steel example reveals how a lot of U.S. firms are maintaining earning pictures by selling off assets. For U.S. Steel, a
strategy, announced in 1980, calls for the sale of assets that aren't needed or don't provide a high return.
Furthermore, this strategy of shedding assets to survive is refined to an art by those large entities known as conglomerates. If there is one industry that mimics the individual inflation chaser--something for nothing--it is the conglomerates.
Conglomerates are over-centralized, decision-making processes. They attempt to gain maximum income by acquiring and shedding industries in the fashion of a stock or commodity speculator. As with the individual inflation chaser, the conglomerate expects to have some losing transactions. The odds, however, are in their favor with the way the politicians, bankers, and necronomists organize the system of production, e.g., tax laws that make leasing assets more gainful than owning and operating the assets. In addition, conglomerates derive much income by using other people's money (OPM) to buy the people's production plants. As the Seagram's and Wheelabrator-Frye examples show (discussed later), conglomerates chop up people's employment to suit the income expectations of a few centralized decision makers: So that a few can get returns of 17% or more, those who are content and happy with less than 17% face unemployment as banks lend their savings and pensions to decapitalistic conglomerates.
Of course, this pursuit of inflationary income by speculating in industries cannot go on. As more and more industries are consumed by acquisitors, the production base declines toward zero. As the acquisition, streamlining, vivisection, and consumption of industries occurs, unemployment will rise as well as the shortage inflation.
Decapitalistic acquisitions is one of the reasons that supply side economics is both hypocritical and fatal. Supply-siders object to consumers having excess cash so as to drive up the price of the available goods. However, supply-siders raise no cry against the industries that use their excess wind-fall profits to demand ownership of existing production which are streamlined and consumed. Of the two forms of demand economics--individual or conglomerates--which is more inflationary?
Deconglomeration: When Big Wasn't Better
Democracy is the best problem-solving, decision-making, and problem solving process when compared to either
anarchy--a lack of a process, or
This tenet is true whether the process is public or private. People are quite aware of how excessive government bureaucracy is wasteful. The waste stems from the over-centralization of public power and responsibility; over-centralization isolates the problem solvers from the problems which the general public suffers. Likewise, private despotism fails. Modern trends (Mobil Oil acquiring Montgomery Ward and Exxon acquiring Reliance Electric) provide proof of how "private nationalization" of decision-making eventually fails. A word synonymous with private nationalization is "privatization."
Unfortunately, and as the following sections show, the private entities suffering the despotic losses are not accepting the evidence for what it is. The evidence indicates that anything less than democratic decision-making will fail. Losses will mount.
Corporations do not describe their actions in a truthful manner. They often engage in semantic slippage, using sheepish terms for lupine predation and failure.
"Many Firms Are Selling Off Acquisitions To Clarify Their Images, Lift Their Stocks"
Corporations call it clarifying their image; however, no one sells well-managed production. Many corporations attempt to clarify their quarterly bottom line by selling units which they have mismanaged.
Isn't something wrong when a company turns to increasing the value of its stock by some means other than increased production? And, informatively, what kind of increased value results? An increase in money without increased production is a case of inflation: more money but no more goods or services.
This trend of shedding acquisitions can be called "deconglomeration." After all, the acquisition process was call "conglomeration," so the divestituring process should be deconglomeration. Deconglomeration shows why free-wheeling acquisition of one industry by an unrelated industry is counter productive to one and all. Deconglomeration is an after-the-fact indictment of despotic, undemocratic decision-making in the private sphere. The increasing amounts of deconglomeration should serve notice to everyone who argues for deregulation and privatization of business without the qualifying requirement of increased democracy in policy making.
Corporations would not pursue inflationary returns through manipulating their stocks if the economy was logically organized. In many cases, the legal laws force illogical practices that are counter-productive. In other words, the value of a symbol of production can be altered without regard to its real production worth. Even worse is when insiders can illogically increase the money value of stock by decreasing its production value, e.g., monopolies and contrived shortages in petroleum. Consequently, the opportunities for artificial manipulation for income without more production is very real: inflation. Inflation results when insiders look out for themselves, who pursue rises in the value of their stock options through quick sell-offs rather than by concentrating on production profits. The counter productive effects of stock manipulation by insiders reflect the results of divorcing the symbols of production (currency, stocks, bonds) from the substance of production.
As said previously, certain industries specializes solely in acquiring other industries for inflationary returns. These industries do not concentrate on production profits. These corporations--conglomerates--are not interested in capitalizing new levels of production or productivity. Rather they are solely interested in acquiring industries for the short-term gains. Evidence of the indiscriminate acquisitions and apparent income is in the following quotation.
"People always ask me how we selected the things we acquired, and I can tell you exactly: What was available." This is how Harold S. Geneen, who was chief executive of International Telephone and Telegraph Corp. for 19 years, sums up methods as the most vigorous acquirer of companies in recent corporate history.
This quotation was taken from an article entitled: "ITT: GROPING FOR A NEW STRATEGY." How has ITT, the carefree acquisitor, been groping and what does it mean for your standard of living?
Just since January, 1979, the $24 billion (sales) giant, which cut its teeth on the stock swap and the big buy, has sold off or shut down no fewer than 33 of the companies and divisional operations Geneen had snapped up. Most of these have gone unannounced--a peculiar but entrenched company policy.
Ta Da! The Great American Sell-off Incarnate! THIRTY-THREE companies, actually, the remains of 33 companies, have been streamlined so as to be no longer sufficiently profitable. The truth of the latter statement is recorded, and the effect is a negatively affected economy.
Two factors are driving these sell-offs. Sluggish profits for the past five years have pushed ITT to rid itself mainly of poor performers. But a second, less recognized factor weighs equally heavily. The future of ITT's main business, telecommunications equipment, is fraught with some awesome risks, partly because the company has been losing ground in a technological revolution. Both problems mean that ITT must trim itself to fight for improvement.
One discernible point is how conglomerates start to ignore their original production base as they seek fast bucks from acquiring other industries. In addition, because their expertise is not in these acquired industries, the acquired industries will be simultaneously mismanaged and eventually shed.
The process of ITT trimming itself translates into a contraction of the total size of the American economic system of production. This contraction is detrimental to all except those who gained from the initial acquisition. To those who object to this interpretation, a simple question should suffice,
"Would the companies have been cast-off if they had been profitable, as they were before mismanagement by an over-centralized corporate headquarters that had acquired them and had no relevant experience in managing them?"
The article notes how the companies were in the red when sold ... not when bought. In addition, the article contained a line that supports the contention that conglomerates make their money by acquiring and consuming industries rather than from profits based in improved production: "Unmatched at buying up smaller companies, the company never won awards for running them."
ITT was and is the little kid that got the key to the candy store, the key being stock swaps or acquisition loans. Once in possession of the key, the little kid ignored his normal income-producing jobs; he made a glutton of himself on the things that had motivated him to mow lawns and run errands. At a certain point, he made a mess of not only the candy store but of his original busywork; he became fat and rusty.
Everyone loses when someone gets something that they have not productively produced, created, earned, or understood. Everyone lost when the necronomists came up with new soppy manipulations--stock swaps, acquisition loans--that allowed small companies to grow faster than they were productively capable of growing. Geneen, like a modern politician running for office, was great at solving the problem of acquiring something. However, as the record increasingly shows, neither the decapitalistic acquisitors nor the politicians can manage what they acquired.
Will ITT continue to "demand" and consume more viable industries using the legal laws passed by corrupt or incompetent politicians? Geneen's replacement at ITT, Araskog, says
that after the divestiture program is ended, ITT will again become a net acquirer of companies.
Who mismanaged acquired winners into losers? Who? Management that was over-centralized and despotic: collective centrism.
What are the "improvements" going to be as a result of divestiture? Short-term breathing-space for ITT in an enclosed economy. The constricting economy will be populated by people suffering asphyxiation because no one has enough intelligence to stop the necronomists and open a window. Is ITT going to initiate new acquisitions? That is what Geneen's replacement said.
The parallel to ITT's divestures is a gambler who hocks his shirt to get a new stake so as to start gambling again. The parallel should not escape the reader's consideration. Nor should the reader's attention ignore how acquisitions and divestitures could not occur without OPM, other people's money. If people did not lend their money (in the form of savings or CDs) to bankers who re-lent to speculators, America would not be suffering from a massive, industrial shake-up through conglomeration and deconglomeration.
When Big Is Not Better: Despotic Decapitalism
ITT is an example of how big in not better. ITT acquired willing and unwilling companies that were self-sufficient, profitable enterprises. The companies would have been better if they had been left alone. The U.S., too, would have a better industrial base today if decapitalizing acquisitionism had never been allowed. Incompetent management grows as green kids are given keys to candy stores in which they lack experience, but do not lack greed. As Geneen said of his acquisition
"People always ask me how we selected the things we acquired, and I can tell you exactly: What was available."
In that quote lies the roots of demise for Geneen, ITT, and the U.S. The politicians, bankers, and necronomists have put together an productively illogical legal system. Decapitalism allows one group to buy another group in which the first group has no relevant management experience. Consequently, the second group eventually goes into the red as the local, problem solving decision-making is replaced by a centralized, insensitive bureaucracy. This insensitivity shows up in cannibalizing the high performance and casting off the average performers WITHOUT any improved replacement.
Conglomerates: More Efficient?
Frequently one hears that conglomerates provide greater efficiency of production. The track record indicates that this is not true: the poor management resulting in sell-offs bespeaks the truth. Actually, conglomerates never did increase productivity per capita, merely productivity per worker. Increased productivity per worker does not mean increased productivity per capita.
A good analogy to conglomerate acquisition strategy is a collection of farmers who decide to each have the best productivity per worker. Initially the fields are full of many workers on each farm; the workforce is composed of poor, average, and superior workers. Seeking higher productivity per worker, Farmer A gets rid of all his least productive workers and quickly parades down the lane advertising how he has the highest yield per worker. Farmer B gets rid of all his workers who are average or less in productivity thereby increasing his earnings per worker to a level higher than Farmer A. Farmer C gets rid of all the workers except the single best worker so as to claim possession of the highest productivity per worker ... and to claim the simultaneous distinction of having the least amount of overhead. Farmer A fires everyone, and he goes to work in the field himself, for he can produce better than any hired hand ... with no overhead.
If one merely looks at productivity per worker without regard to productivity per capita, the above sequence happens to an economy. There will be conglomerates (farmers) who specialize in reducing total production and productivity per capita under the guise of increased productivity per worker. In the above analogy, all the farmers will have increased productivity per worker but at the expense of productivity per capita for the population did not decrease. (Of course, at a certain point, the forcefully unemployed fieldhands will do the logical thing and remove the illogical farmers from policy making positions.)
When people look at the wrong statistics and values, the above ludicrous and illogical sequence occurs within a system of production. While productivity per worker may have been increasing with each acquisition, productivity per capita was continually dropping and unemployment rising. With the drop in productivity per capita came the axiomatic drop in production and consumption per capita, a drop in the standard of living. Shortages and shortage inflation cropped up in place of consumable products.
The above parable of farmers mismanaging their system of production is taking place in the real world today; it involves primarily the acquisition, streamlining, and divestiture of production by conglomerates
with political sponsorship using your voted mandates,
Another analogy to the farmers would be a city served by three taxi companies in which the owners decide to have the distinction of the fastest taxi in town. By the end of their necronomic competition, the town ends up with poor transportation while serviced three fast taxis driven by their owners. The owners had cannibalized all the other taxis for the best parts.
The moral of these analogies: Numerous tortoises are a better bet than a fast hare when comes to production. Today, conglomerates using mergers and take-overs are streamlining and cannibalizing the whole system of production. They defend their actions on the basis of higher worker productivity. However, this is not a higher level or productivity per worker within the work force. It is merely an increase within their company at the expense of productivity per capita and per worker in the country as a whole. Productivity may have increased per employed worker; however, conglomerates lower productivity per employed and unemployed worker.
Consider the following questions. They simplify what seems to be a confusing world to basic questions.
Do we want a forest with one grand tree or a thousand average trees?
Our top public and private leaders are deciding to follow a course of "fewer few." They rationalize this on the basis of productivity of a few rather than productivity of the whole.
There are many latent, ingrained forces that dictate a declining American future. One force is the Master of Business Administration (MBA) programs. Predominantly, these programs teach acquiring income through manipulating individuals and industries rather than teach the logic of increased profits from production. One should not think that he has profit from production merely because one buys an industry. America is beset by top policy makers in private enterprise whose mentality is not production but acquisition. Can this MBA mentality be changed? Or, will it continue to burden any attempt to rebalance the economy toward production income?
Reshuffling the Deck for the House
The manner in which conglomerates acquires and discards industries can be compared to a gambler who keeps switching decks in hopes of finding the winning combination. A crooked gambler of course can reshuffle the deck to benefit the house ... or himself. Of course, this can go on only for so long before the flock is fleeced or awakened.
An example of a corporate head and the MBA mentality reshuffling the deck for his house--and for himself--is found in the comments of William Agee, head of Bendix.
When pressed by reporters on his acquisition plans, Mr. Agee repeated that he's looking for one or more companies with sophisticated products and the potential for quick growth and high returns. "We're looking for businesses that will outgrow the rest of the economy and may have a synergistic relationship with our current operations," he said.
In other words, Bendix is not looking for any unsophisticated, essential production, and Bendix will streamline ("synergize") any acquisitions.
Within Agee's comment is the classic inflation chaser's criteria for acquiring a product, production, or individual: "high returns". Does he say anything about capitalizing new levels of productivity or production? No. As a result of conglomerates continually reshuffling the industries of America, the productivity per capita decreases. Of course, this destruction of production is glossed over by concentrating on the increased income of the decapitalizing conglomerates. An example of this glossing-over is the following quotation, which contains a truth that the writer missed.
Companies are finding that they can get top dollar for units that they no longer want. And they are coming up with plans to shed the excess weight and make a killing at the same time.
To properly understand this comment, the reader must recognize the word "company" really refers to the major stockholders, to the insiders, to the executives and the directors. "Company" does not refer to the physical plant or the stockholders as a whole. Restated or rephrased, the quotation means that insiders are able to derive a lot of income by killing production, by killing productivity per capita: decapitalism.
Support for this contention of production necroses is found in the statement of another writer,
This new wave of split-ups has little in common with the old run-of-the-mill divestitures designed to shuck losers. These days managements are lopping off pieces of their companies as a way of making their shareholders richer overnight.
The insiders are making millions through decapitalism, a killing that is killing the industrial production base of America. Their getting "richer overnight" is pure inflationary returns, an increase in their amount of wealth without an increase in their productivity. Quite to the contrary, their inflationary gains come like most inflationary returns from the reduction of production, from returning a system of production to a lower level.
They are not capitalists. They are counterproductive decapitalists. They should be stopped before they stop America, humanity, and civilization. When one gets rich overnight, it is not a result of producing wealth. It is a result of inflationarily acquiring wealth from those who have worked hard and long to produce the wealth. A stock killing by insiders is no different than an embezzler or robber in terms of taking wealth from the victimized producers.
Another example of the vivisection or killing of production in America, especially essential production, is Esmark. In divesting itself of Swift packing, Esmark is delivering the sizzle but keeping the bacon.
Esmark Inc., ... finally decided to dump the business that gave the company its start. It's keeping many of Swift's brand-name products, but plans to sell off most of the fresh meat business in a public stock offering. The idea is that an independent Swift Packing will be free from high pension and labor costs, and hopefully more competitive.
A classic case of conglomerate cannibalism! Necronomically, an independent Swift Packing will be free from high pension and labor costs" merely because it has reduced production, cut production and labor force.
A spade should be called a spade, and not glossed over with double-talk to appear as a altruistic action. Esmark is going to keep the profitable ends of Swift and sell the rest to a lot of blissful souls, souls who will lose their souls, small savers who will be buying something that is worth less and less. Would Esmark divest if such were not the case?
The manner in which the insiders benefit from chopping up production is quite simple. Most of them have stock options and stock bonuses. If a possession is sold off, they have stocks that are worth more, and worth higher dividends. Consider the effect of the following action on the stockholdings and dividends of the corporate insiders: the executives and the directors.
A consultant sees an even more fundamental reason for selling subsidiaries: money. He notes that Esmark, by taking in about $1 billion for its profitable Vickers Energy Corp. (which accounted for 41% of the parent company's operating earnings), will have more than enough money for its plan to buy back half its 22 million shares outstanding. Even then, Esmark will have enough left over and will be able to borrow funds to make more acquisitions of companies in tune with its strategic plans.
"It's one of the more brilliant moves in recent corporate history," the consultant said.
BS! Esmark is an incisive instance of the necronomic vivisection of a human system of production by conglomerate insiders!
Esmark selling a subsidiary that provides 41% of its revenues does not make sense for the corporation as a whole. However, using the money to buy the companies stock to benefit the remaining stockholders makes sense ... for the remaining stockholders, who will of course include the insiders.
What does these actions amount to? Capitalism for a fewer few. They decrease productivity per capita and capitalism per capita. The drop in production will increase as Esmark, Bendix, and ITT follow the decapitalist strategy of
acquire, streamline, and discard
that each have publicly stated as being their corporate strategy. All represent the inflation chaser at the corporate level who crowds-out production profits in pursuit of the faster gains from inflationary returns. After all, you can decapitalize and padlock more factories in a year than you can capitalize and open. Where are the top policy makers of the system of production that are supposed to integrate a logically balanced system of production? They are cavorting with the informaniacal necronomists.
The Subtle E.F. Hustle Shuffle
In the discussion of the Great American Sell-off, individuals selling personal possessions and insiders selling industrial production have been discussed. There is an interface between the two which can be described as the E.F. Hustle. The E.F. Hustle involves use of what is known as "equity financing", whence the initials "E.F." The E.F. Hustle involves a company selling additional stock to the general public as a way to raise money.
In theory, the money acquired from equity funding is supposed to capitalize expanded production. However, as the following quotations show, the money is being used increasingly to cover the overhead of unprofitable industries that are able to "hustle" the naive or blissful public, the E.F. Hustle.
Conversion of the mutual S+Ls to stock companies is creating a lot of new publicly held institutions, infusing them with badly needed cash and enriching some underwriters.
This quotation contains the reason why the E.F. Hustle is a form of decapitalism. First of all, the capital that is keeping unprofitable companies afloat could be used to capitalize production; the lack of capital in production causes lower production per capita--decapitalism.
Secondly, "enriching some underwriters" prompts a lot of perspective production engineers to think counter-productively: "It is more gainful of dollars to study the manipulation of the production symbols--stocks--rather than study production itself." This diversion of human resources away from production, because of more short-term gains elsewhere, decapitalizes production.
Through the E.F. Hustle a lot of people are suckered into buying parts of unprofitable companies that would be discarded if they were owned by a conglomerate. Individuals willingly throwing their money into unprofitable businesses is sad. However, this foolishness is not as sad as the individuals who have their earnings mishandled by corporate insiders through the E.F. Hustle through pensions. Equity financing is
a handy way for management to raise cash. In these cases the trust, in behalf of the workers, buys large amounts of the company's stock. It borrows the purchase money from the lenders, and the company guarantees the loans.
Everyone wins except for unrepresented, disenfranchised employee who gets stuck with an inevitably worthless pension plan. How valuable are the contents of pensions that contain stock in which management has use necronomic manipulation of symbols in order to remain in business?
The use of the E.F. Hustle through unrepresented pension plans is like the National Debt. The top policy-makers of the whole system of production borrow money in the name of the tax-paying worker. And like corporate heads establishing empty pension funds using the E.F. Hustle, the modern politicians come out ahead. They don't have to repay the loan, but get the glory of opening a new welfare center.
Acquisition Decapitalism: Disrupted Production
Acquisition decapitalism disrupts production in many ways. The most obvious way is when production is streamlined to produce the productivity per worker that the decapitalist wants, regardless of the effect upon national productivity per worker, or per capita. Less obvious is the role of acquisition in causing instability within on-going production, namely, within "take-over" a targets. An example is how
for a while, Cyanamid had some trouble recruiting employees who feared losing their jobs in a merger.
Even though Cyanamid was not involved in an acquisition, its production was negatively affected by the tolerance of acquisition decapitalism within a system of production. Cyanamid had recruiting difficulties because of the common fate of many acquired industries.
Wheelabrator was the "friendly" [sic] suitor, but quickly fired hundreds of Pullman employees and is laying plans to pare operations....
Question? Was Pullman in bankruptcy proceedings? Or, was it a viable company vivisected to fit the productivity per worker level of some distant decision-making process? Was the result more and cheaper rail cars for America? No. Was more production capitalized in America, creating more jobs by this acquisition? No, just the opposite, "hundreds of Pullman employees" were no longer receiving wages from producing needed goods, rather they were thrown on the unemployment roles. Thanks, Wall Street! Thanks, Mr. Banker for lubricating the reduction of the American economic system of production.
Many companies have sought to avoid Pullman's demise by being acquired by a company that was one-third of its size using OPM. They have directed their capital into preventing take-overs. The production consequences are obvious: fewer investments into capitalizing expanded production.
This article heading not only shows how decapitalism wastes resources, but how toleration of inflationary returns within a system of production eventually forces the honest capitalist to suffer. In fighting off acquisitors, the capitalist who is interested in honest, production profits suffers.
A term was coined on Wall Street for describing resistance to take-overs: lock-up. Through a lock-up, a target corporation approaches other corporations to buy up its stock so that it won't be taken over by some conglomerate that has a clear record of acquire, streamline, and discard the strange remains. Of course, many necronomists don't share the view that acquisition and decapitalism is bad for production. Rather, some of them subvert capitalistic and democratic ideas so as to paint the resistors of decapitalism in bad light.
A merger specialist at a Wall Street law firm contends that these tactics are unfair. "Is it right," he asks, "for management to stifle competitive bidding for the company's shares by stacking the deck in favor of one bidder?"
Where are the supply-siders that detest mere demand and consumption? Why aren't they stopping the highly inflationary practice of acquire, streamline, and vivisect? The above quotation is a classic, it typifies the decapitalizing necronomists who ignore the bigger environmental laws, the real total ecos-nomos! Where are the logical policy makers that make legal laws to protect the logic of production? They are nowhere to be found.
The Northern Chill
It is bad enough when the modern politicians allow Americans to acquire and decapitalize domestic production. However, when the politicians allow and encourage foreign ownership of domestic production, something is very wrong. The wrongness shows up in the form of unavoidable effects of distant decision-making: despotism. While many examples of increased foreign domination can be cited, the ones from our northern neighbor are the most chilling to our economy.
One news weekly article was entitled "Canadian Firms on the Prowl." In this article was a listing of how many foreign firms are buying up U.S. real estate. While a few land-sellers benefit from the infusion of foreign cash, everyone else suffers from the foreign competition for the limited amount of real estate. Inflation affects not only the real estate market from this foreign competition, but other markets as the infused monies filter through the system of production. These monies cause inflation because they did not come from the production of domestic goods; in other words, the domestic money supply increases each time that a foreigner buys U.S. real estate without an increase in production: inflation.
The U.S. is not the only country negatively affected by foreigners speculating in U.S. real estate. If the money from abroad is here then it is not stimulating foreign economies. Foreigners buying U.S. real estate are not improving their own:
"European Housing Shortage: 'Youths Occupy Empty Plant'"
It was the latest occupation staged in West Germany to demonstrate the need for more and cheaper housing. Hundreds of buildings elsewhere in Western Europe have been taken over in similar protests.
In May of 1980, the Netherlands inaugurated a new queen. The festivities were disrupted by housing-shortage riots. It is no coincidence that the Netherlands have had housing-shortage riots, and as the previous article reported,
among foreign investors in the U.S. The Netherlands remains by far the biggest overall.
Decapitalism is an economic phenomenon that occurs intra- and inter-nationally. Intra-nationally, the effects of foreign land ownership show up as inflated real estate prices which fewer Americans can afford. At a certain point, it will not be merely the lower socio-economic classes that riot over housing conditions in America, e.g., Miami. As mismanagement of the legal laws of production becoming increasingly decapitalistic, the resultant economic hardship will affect enough people so as to generate a mass solidarity reaction.
Until at such time as there is a solidarity of capitalists to initiate productive laws, individual industries will have to waste resources fighting off the domestic and foreign decapitalist.
Frantically trying to turn back a takeover bid by a unit of Canadian Pacific Enterprises Ltd., Hobart Corp. has resorted to throwing politicians in the acquisitor's path.
This foreign acquisition does not increase U.S production, U.S. productivity per worker or U.S. productivity per capita. The Canadian conglomerate is not streamlining companies that are receiving government subsidies, they are affecting a self-sufficient, profitable and viable part of the U.S. industrial production base! Are any government subsidies going to Hobart?
How are the politicians responding? Are they saying that we must stop this wholesale decapitalistic sell-off of American production and jobs?
The House panel is particularly concerned about the possible role of U.S. banks in financing the takeover bid.
LEGALLY! With legisflation from corrupt and incompetent politicians, legal laws do not reflect and support the logical laws of production. Consequently, one encounters the previous quotes on a frequent basis in which the logical laws of reason are ignore in preference for the laws of legisflation, legalized inflation enacted by corrupt and incompetent politicians.
One reason why politicians do not stop the decapitalization of American production is because they get a piece of the action. Many are insiders who benefit from decapitalizing production, both here and abroad. Consider the following quotation by the Secretary of Treasury is Donald T. Regan who was the former chairman of Merrill Lynch and who had millions of dollars in Merrill Lynch stock:
A representative of Hobart's investment advisor, Merrill Lynch White Weld Capital Markets Group, testified last month that if Canadian Pacific's offer is the only one and if major problems aren't found with it or with Canadian Pacific's operations, shareholders "would sell" at the $3250 price.
Hobart and other production industries must realize that Wall Street is really no friend of capitalism; the Wall Street financiers can in many case make more money facilitating the decapitalization of production rather than facilitating new production. After all, Wall Street makes its money on stock transactions without regard to whether the stocks are fresh or stale. If a company like Hobart isn't expanding its outstanding stock to capitalize new production, then Wall Street won't have any income from transacting Hobart stock as compared to facilitating an acquisition or merger of Hobart.
Seagram's Fordom, Not Freedom
Can the productive individual or industries of America expect to survive the onslaught of decapitalistic busyness practices? No. As an index of the growing trends indexing Canadian ownership of America, consider the grand-daddy of the Canadian chill, namely, the $3.2 billion Seagram's loan.
Seagram arranged a $3 billion Eurodollar credit, one of the largest ever, with a group of U.S, Canadian and European banks. The company said the funds will be used for acquisition, but possible targets and a timetable weren't disclosed.
The important thing to realize about both the Hobart take-over and the Seagram's loan is the "role of U.S. banks" in financing foreign domination of U.S. production, a fordom that will lead to vivisection of healthy industries.
Where did the bankers get the money? From the small savers, many of whom will be devastated by a banker lending their money to generate more unemployment and sinflation. Any one lending money to a banker through savings, checking, or certificates of deposit is only increasing future suffering from inflation, unemployment, over-taxation, and violence. If the bankers didn't have the money to mislend for decapitalism, people wouldn't suffer. Nor would decapitalization occur if the small person did not provide the pennies for the necronomic stock and commodity exchanges.
The Great American Sell-Off could not occur if there was not someone buying. The previous section detailed how the sales involved transactions that benefited the professional insiders at the expense of the less knowledgeable individual or industry; in all cases the buyers are getting less than they expect, with a built-in, continual loss factor. The built-in continual loss is guaranteed by the fact that the sold industries or sold stocks are in production which is less and less profitable. In a sense, the industries have been wounded by decapitalistic practices and will slowly, but surely, lose their economic viability. Besides buying stocks that are over-priced, people are also buying stocks that will lose buying power regardless of the dollar value as the production collapses.
People naively buy "wounded" stocks because they are not informed. Their numbers are not small or decreasing. As the following quotation shows, they foolishly pursue inflationary returns rather than production profits. What does this pursuit mean? Production will be capitalized even less as the small fries speculate on the symbols of production (stocks) rather than invest in production. This is the old tortoise/hare distinction once again.
"Many New Investors Have Modest Means But Large Ambitions - Hoping to Get Rich Quickly, They Buy Risky Issues; But Some Just Get Poorer - 'It Beats the Roulette Wheel'"
This quotation shows how the growing amount of monetary and human capital that is being diverted away from production into speculation. As speculatory enterprises increasingly crowd-out investment production, production must fall per capita and sinflation must follow, along with unemployment.
The instances of small fries trying to get ahead without productive activity are occurring not only in stocks but in commodities. Again, as the following quotation shows, the insiders have the edge. The neophytes lose directly, and everyone loses as the government condones or catalyzes the shift of human resources away from production. As you read the following quotations, think of how all the human capital spent in commodity speculation could have increased the production of commodities. The increased production would produce the price stability which the commodity brokers "claim" to provide in these inflationary times.
Since somebody must lose all the time and since professionals and hedgers cannot afford to lose long term, it becomes the general public's function to supply the money that keeps the professionals and the brokers happy and solvent. Small speculators typically lose on 80% of all trades ....
This quotation is from an article entitled "Step right up, folks ... " And it tells it like it is. The professional has all the odds in his favor: informationally and financially.
Executives and brokers who use inside information to anticipate or cause stock movements can end up in jail, commodity traders are free to make millions from such knowledge.
The last quotation indicates how the public supplies money for the professionals in more than one way. Readily obvious is how the foolish small fries feed the professionals by gambling with insufficient information. Not so obvious is how innocent people supply money through their banks for the professionals to use when taking advantage of inside information.
Many people have never heard of the futures market. What does it cost the public? The losses of the foolish small fries trying to outwit the professionals is a pittance compared to the inflation that commodity professionals cause. The professional speculator holds commodities for the maximum inflationary price rise; the inflation affects the production businesses which have to pay higher loan-interest rates in competition against the speculators for the available loan monies.
A new futures center opened in 1980 in New York City which is called the New York Futures Exchange. The acronym for this commodity speculation pit tells it like it is. The NYFE will become part and parcel to the vivisection of the
American Economic System Of Production
as human talent pursues decapitalistic inflationary returns
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